Citigroup: Maintains "Buy" rating on MAOYAN ENT (01896) and raises target price to HK$10.8

Citi released a research report stating that it maintains a "buy" rating on MAOYAN ENT (01896), with the target price raised from HK$9.2 to HK$10.8. It sees Maoyan as a quality investment target in the film industry. The bank has adjusted the company's revenue forecast for the current and next year by an increase of 3% and a decrease of 1%, to HK$4.7 billion and HK$4.9 billion, respectively. Adjusted net profit forecasts have been raised by 10% and 2% to HK$969 million and HK$1 billion. Citi points out that Maoyan has opened a 30-day observation period for bullish catalysts. The bank expects the box office market in the first half of 2025 to face upside risks, forecasting box office revenue of RMB 33 billion, compared to market expectations of RMB 26 billion. This reflects the contribution of "Ne Zha 2" and the strong performance of Maoyan's "Detective Chinatown 1900". The company is expected to announce its 2024 fiscal year performance at the end of March, and management is anticipated to have a positive outlook for the first half of this year. Based on the latest box office performance, Citi has raised its forecast for the first half of this year's box office revenue to HK$55.5 billion, and believes that the company's current valuation is attractive. The current valuation is at 8 times earnings per share for the current fiscal year, with significant room for improvement compared to historical low double-digit multiples. Finally, the performance of the film slate for the 2025 fiscal year is strong, including "She Has No Name".